Christmas and new year is often a busy period for family law offices – for the unhappy reason that separations and divorce inquiries spike at this time of year. But for accountant Moore Kingston Smith LLP, the last six months have been just as hectic.
Why? Well, it seems that Rachel Reeves has played a part. As a result of widely expected changes to inheritance tax in the budget, Tim Stovold, partner at the company, says his team has worked on more pre- and post-nuptial agreements this year than they have in the previous 10. “We’ve seen a lot of asset transfers, either grandparent to children or parent to children,” he says. Many were accompanied by requests for legal protection in case of a matrimonial dispute.
This is one of the many ways the public’s financial behaviour has shifted in the uncertain run-up to 26 November. Growth has emerged as the injured party, with figures last week showing the economy shrank 0.1% in October. Businesses in all three main sectors of the economy – services, manufacturing and production – reported to the ONS that they, or their customers, were “waiting for the outcomes of the budget”. In the three months to October, construction output fell by 0.3%, while output in Britain’s core services sector flatlined.
Consumer spending – which accounts for nearly two-thirds of national output – remains fragile. Barclays says card spending fell 1.1% year on year in November – the largest fall since February 2021. All this amounts to a substantial pre-Christmas hangover for the economy – and it’s becoming a yearly tradition. “Over the last two years, growth has been strong in the first half of the year, and completely peters out in the second half,” says Tom Pugh, chief economist at RSM UK. “Part of it is these constant, confidence-sapping events, whether that’s an election, a budget or tariffs.”
Is Britain’s negative growth story becoming a self-fulfilling prophecy? For the first time in a long time, interest rates are down at 3.5%. Before October, data shows firms were borrowing and raising finance at a decent rate. “In terms of the outlook for next year, the single question is whether consumers will continue to save at abnormally high rates, or whether that comes back down,” says Pugh. Let’s hope for some conciliatory gifts, purchased in the new year sales.
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